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Arizona paying out less in unemployment fraud

WASHINGTON — Arizona had the lowest rate of improper unemployment insurance payments in the nation last year, a ranking that one official said reflects the benefits of new initiatives introduced in the last two years.

The U.S. Labor Department estimated that Arizona issued about $5.3 million worth of improper payments — the sum of benefit overpayments and underpayments, minus overpayments the state has recovered — between July 2012 and June 2013. That was just 1.5 percent of the total $368.1 million the state issued in unemployment benefits during that time, the lowest rating among 50 states and the District of Columbia.

It’s a big improvement from two years ago when Arizona had one of the highest improper payment rates in the nation, according to Mark Darmer, deputy director of programs for the state’s Department of Economic Security. The U.S. Labor Department had put Arizona’s rate at 20 percent then, he said, but new programs have brought down the rate.

“We took that very seriously,” Darmer said. “We put in place several quality initiatives within the unemployment insurance program here in the department to bring down that improper payment rate.”

Those initiatives, he said, include working with the Department of Corrections to see if inmates are filing claims, using national and state directories of new hires to see if people continue to collect benefits after getting jobs and aggressively pursuing tax returns to ensure that people have made accurate claims.

Businesses have also worked with the state in creating new rules and pushing for accuracy in benefits. Chad Heinrich, vice president of public affairs and economic development for the Greater Phoenix Chamber of Commerce, said business has a vested interest in ensuring proper payments because businesses fund the insurance system.

“If the costs of the system increase, those costs are borne by the business community,” Heinrich said.

Though Arizona ranked low for its improper payment rates, the Labor Department estimated that about 5.9 percent of those payments resulted from fraud, the fourth-highest rate in the country.

The largest cause of fraudulent payments in Arizona is people who continue to collect benefits even after finding jobs, Darmer said. The DES is trying to crack down on this kind of fraud by encouraging employers to increase the number of new-hire reports and speed up those reports.